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Microsoft is planning to roll out its first "cloud-enabled" Dynamics ERP (enterprise resource planning) applications by the end of this year, the company announced Monday during the Convergence conference in Houston.

At last year's Convergence show, Microsoft first discussed intentions to port its four ERP lines to the Azure cloud platform upon the next major release of each product. This will start coming to pass in the fourth quarter of this year, with the release of NAV 2013 and GP 2013, Microsoft said. A beta version of NAV 2013 will arrive in May.

Microsoft is also planning to discuss plans for ISV partners offering Azure-hosted services for various verticals, including retail, fashion and equipment manufacturing, according to a statement.

The vendor is hoping to differentiate itself from competitors through the notion that Dynamics customers have flexibility when going to the cloud, with support for hybrid deployments that keep some aspects on-premises in their IT environment, as well as private clouds. "We deliver cloud on your terms," said Kirill Tatarinov, president of Microsoft Business Solutions Division, during a keynote address on Monday, which was webcast.

It was a theme Microsoft chief operating officer Kevin Turner also sounded during remarks prior to Tatarinov's. "We're not trying to move you to our cloud," Turner said. "We're saying if you want to build your own cloud, we'll help you do that."

Another announcement will concern the fourth-quarter release of AX 2012 R2, an update that will include new BI (business intelligence) capabilities geared for the needs of individual users, Microsoft said.

"If you're deploying AX 2012 today, stay the course," as R2 will give users new features and functions on top of the platform, with "no re-implementation required," Tatarinov said.

In addition, Microsoft will reaffirm its plans to move AX, which is aimed at larger companies than the other Dynamics applications, to Azure. However, no firm time lines will be provided, said Fred Studer, general manager, Dynamics. Nor will Microsoft discuss when Dynamics SL, a product used by services companies, will end up on Azure, according to Studer.

The lack of information doesn't mean Microsoft is going back on its plans, he added. "We're still committed to delivering all of our ERP on the cloud."

Dynamics applications, whether run on-premises or hosted, historically have been sold directly through partners. That won't change with Azure, Studer said. "The partner ecosystem is a critical component. They've already built relationships with our customers."

Partners will be able to sell Azure-hosted Dynamics via subscription, a pricing model intrinsic to the SaaS (software as a service) world. But those details are still being ironed out, with no specifics coming until sometime after Convergence, Studer said. "As we go through the beta [for NAV], surely we're going to learn how best to drive that. We want to make this as easy as possible."

It's likely that once complete, Dynamics subscription pricing "should map out to current models," said analyst Ray Wang, CEO of Constellation Research.

All Dynamics ERP products will continue to be available in on-premises form and through traditional hosting partners after the Azure launch.

In his keynote, Turner also sought to sell Dynamics users on the benefits they'll gain through integrations with Microsoft's broader portfolio of cloud software, such as the Office 365 productivity suite, as well as upcoming technologies like the Windows 8 OS.

Windows 8's chip architecture support will "open up a whole new plethora of devices," and the Metro user interface will provide a consistent user experience across device types, benefiting Microsoft's entire software portfolio, including Dynamics, Turner said.

The overall message wasn't lost on Wang.

"Dynamics is growing up," he said. "The synergies within Microsoft are being realized."

Turner also sought to portray Microsoft as a company driven to aggressively reinvest its profits in the business.

Microsoft will spend $9 billion on research and development this year, a sum that is "$3 billion more than the nearest technology company, ladies and gentlemen," he said. Turner didn't provide a breakdown of where that money is spent, but said that "basically every product" will be "refreshed" within the next 12 to 16 months.

In other news announced Monday:

The next update to Dynamics CRM, which uses the same code-base for both the on-demand and on-premises versions, will be released in the fourth quarter. New features will focus on "social customer care and cloud-based data enrichment services," Microsoft said in a statement.

A number of large systems integrators, including Accenture, McLane Logistics Technology and Bull, have joined the AX ecosystem and are customizing it for various verticals.

Microsoft is forming a partnership with InsideView that will integrate that vendor's "sales intelligence" software with Dynamics CRM.

Microsoft is expecting more than 10,000 people to attend Convergence, which runs through Wednesday.